American Express to Buy Munich's Loyalty Partner

American Express Co., the biggest U.S. credit-card issuer by purchases, agreed to buy Munich-based marketing firm Loyalty Partner GmbH for 496 million euros ($660 million) to add 34 million international consumers.

American Express will pay 425 million euros in cash, while a 71 million euro equity interest will be held by Loyalty Partners, AmEx said today in a statement. New York-based American Express will acquire the equity interest over five years based on performance gauges. The acquisition is expected to be completed in the first quarter of next year, according to the statement.

The transaction will add holders of Loyalty Partner cards mainly in Germany, Poland and India to American Express and increase fee-services revenue, the company said. Loyalty Partner will be an AmEx subsidiary as part of the International Consumer and Small Business Services division, according to the statement. Douglas Buckminster, the group’s president, will head the unit and Alexander Rittweger will continue as chief executive officer of Loyalty Partner.

“Increasingly, consumer decisions about where to shop and how to pay are based on loyalty offerings,” Ed Gilligan, American Express’s vice chairman, said in the statement.

Loyalty Partner expects to increase profit this year to 230 million euros from 209 million euros last year, Daniel Henry, American Express’s chief financial officer, said in a conference call.

Expansion Plans

The companies plan to expand merchant-based loyalty programs in such developing countries as India because they make it easier to reach consumers, Gilligan said. In the programs, which aren’t always connected to a credit card, large merchants such as gas stations might collectively award customers points for purchases at specific locations, Gilligan said in a telephone interview.

The U.S., where airline miles programs and membership rewards are most similar to loyalty programs, could also be a potential market, Gilligan said.

“Membership rewards at its core gives you a point for every dollar you spend,” he said. “That is how American Express does loyalty today.”

American Express Co., the biggest U.S. credit-card issuer by purchases, agreed to buy Munich-based marketing firm Loyalty Partner GmbH for 496 million euros ($660 million) to add 34 million international consumers.American Express will pay 425 million euros in cash, while a...